Top Economist Says Tax Switch Simple, Fair

Kansas City Star ^ | Dec. 02, 2004 | MARTIN CRUTSINGER

[konaice]

That's what scares me. I live in a state with a sales tax. It was 3% forever, then it started creeping. Now it's close to 8%.

And I wager you had an oppertunity to vote on that in the polls many times in the interum.

[ancient_geezer]

I want to know which Republican is talking about a VAT?

Bruce Bartlett of NCPA amhas been pushing it hard.

==> ECONOMY; A New Money Machine for the U.S.; The old ways can't keep up. We need a value-added tax to meet revenue demands.

 

Don't forget the tar & feathers, and rail first.

Then: "Time for a re-education seminar out behind the woodshed!"

That's why you find so many hit pieces by Bartlett against the NRST.

VAT is a lousy way to have to do business, worse for the citizen, but great for government; but it is a requirement for EU membership, for those interested in joining them.

[crz]

I'll pay it. Although I aint nuts over including the social security defferments in it. Id sooner see a strait 10%...AND I WILL PAY IT AND BE HAPPY.

Prices will drop first off. So the same case of beer will cost less WITH the 23% added on.

[Texas Eagle]

Prices will drop first off. So the same case of beer will cost less WITH the 23% added on.

OMG. How many have you had? Tonight I mean.

[ancient_geezer]

Does anyone have the figures on how much it takes to RUN the IRS? That savings alone should make up for the sales tax exemption to low income.

IIRC their last budget figures came in over $9 billion.

[slowhandluke]

The multimillionaires wont like it. They'll actually have to PAY tax - no loopholes, dodges, etc...

You are no where near cynical enough.

It's a lot easier for the millionaire to not spend all his money than for a regular guy, which is a simple and effective way to dodge the tax. Or, just move all your spending to Costa Rica. Or hide your personal expenses as corporation benefits and perc's.

I think you forgot how many millionaires are in the Senate and you have to get a bunch of those millionaires to vote for this. There will be loopholes & dodges.

[Bigun]

I smell V I C T O R Y ! ! !

[konaice]

Quote: Prices will drop first off. So the same case of beer will cost less WITH the 23% added on.


No, income will go up first. No more tax deductions.
Prices would stay the same for a short while, and there would be predictable screams about gouging. But after a while, when you remove all the tax from the production chain, the base price will come down, and the tax will add it back in. Its argued that there would be no net difference in prices+tax with a couple years. Remains to be seen.

[maine-iac7]

about 600 billion to collect and make out tax forms under the present system.

Whoa!

(thanks, crz) that's a lot of shekels...any estimates on how much to 'reimburse" low income folk on the consumer tax method?

(I've been following this idea for years = it's been rumbling around the halls of DC for years and from figures I saw some time ago, the consumer tax would actually bring more $ into Washington, while still being a fairer tax. With the consumer tax, the multimillionaires would really, finally, be paying a fair share - no loopholes, no dodges

[Figment]

" It seems that taxes can be hidden among various levels of production which the consumer will end up paying anyway"

The consumer is the only one who pays taxes now. The income earners and consumers pay ALL taxes. Producers are tax collectors under the current system

[crz]

AH Another CPA! Never fails when this get talked about they come out of the woodwork!

[MWS]

VATs are evil. That's a road I hope we never go down.

A straight up sales tax sounds like the way to go, if implimented correctly.

[deaconjim]

Is Bartlett a Republican or a RINO? Don't forget, Democrats will lie to you; some of them will even lie and tell you they are Republicans.

[Lizavetta]

Everybody pays a national sales tax. Everybody.

What do the fair taxers say about the black market, which I presume will skirt around sales taxes?

[NJ Neocon]

I concure.

Any sales tax or VAT simply will allow us to be killed in the "death by 1000 cuts".

Make everything income tax based (States may not agree on an individual basis however) and end payroll deductions. That would kill it quick.

[crz]

Was on Fox News last night...of course then there were those who said that was all garbage..but it was a republican congessman who stated it.

[ancient_geezer]

When you want to exempt low income people from paying taxes on certain items, you must have a way to identify said people.

No you don't, provide a means to treat everyone the same, simply grant a bracket exclusion of tax for povertylevel expenditure for everyone. Works like the personal exemption on an income tax.

HR25, does it with a monthly grant to each household based only on number in the household:

It simple, straight forward, everyone is treated the same both when the buy, and on exemption.

 

Under HR25, All legal residents will receive a monthly demogrant called the Family Consumption Allowence(FCA) equivalent to the FairTax paid on essential goods and services, also known as the poverty level expenditures. The FCA is paid in advance, in equal installments each month. The size of the monthly FCA will be determined by the government's Poverty Level for a particular family size, multiplied by the tax rate, and paid to all households regardless of income or actual expenditure. The HHS poverty llevel is a well-accepted, long-used poverty-level calculation that includes food, clothing, shelter, transportation, medical care, etc. See chart in Figure 1 below.

 

Figure 1: 2004 FCA calculation
Family size	HHS annual poverty level	FairTax annual consumption allowance (single person)	Annual rebate (single person)	Monthly rebate (single person)	FairTax annual consumption allowance (married couple)	Annual rebate (married couple)	Monthly rebate (married couple)
1 2 3 4 5 6 7 8	$9,310 $12,490 $15,670 $18,850 $22,030 $25,210 $28,390 $31,570	$9,310 $12,490 $15,670 $18,850 $22,030 $25,210 $28,390 $31,570	$2,141 $2,873 $3,604 $4,336 $5,067 $5,798 $6,530 $7,261	$178 $239 $300 $361 $422 $483 $544 $605	N/A $18,620 $21,800 $24,980 $28,160 $31,340 $34,520 $37,700	N/A $4,283 $5,014 $5,745 $6,477 $7,208 $7,940 $8,671	N/A $357 $418 $479 $540 $601 $662 $723

[ The monthly FCA for each adult is .23 * (HSS poverty level for a single person)/12 to assure no marriage penalty due to the manner in which the poverty level is dependant on family size. The monthly FCA for each child is .23 * (the incremental increase of HSS poverty level for a family with one child over no child) ] A. Geezer

A family of four, for example, could spend $24,980 per year free of tax because they will have received over the course of the year a demogrant totaling $5,745. $5,745 is the amount of sales tax paid on $24,980 in expenditures. That family spending double the "poverty level" or $49,960per year will effectively pay tax on only half of their spending and, therefore, have an effective tax rate of 11 ½ percent or half the FairTax rate.

The beauty of the FairTax is that you can control how much you pay in taxes. If you happen to save, invest or spend a portion on used [previously taxed] items, you can get your effective tax rate below 9%.

To illustrate examine the tax burden that a family of four will have at various annual expenditure levels as compared to that same family under the current tax law, (2004 income plus FICA/MC):

 

H.R.25 "The FairTax Act

Not only does every family receive a FCA based on family size, not income, but they will also receive 100% of their paycheck.

[randog]

That would be "no".

[Figment]

"Well, plus one good benefit of the sales tax is that it hits people who hide their income and cheat on their taxes"


Yep, it hits the drug dealers and the work for cash illeale aliens just like the rest of us

[Irene Adler]

"Problem with a national sales tax is this. When you want to exempt low income people from paying taxes on certain items, you must have a way to identify said people. Expect the ACLU to raise a fuss about the Idea of a "poor card" to begin with and furthermore, once you have issued your cards, whats to prevent the rampant fraud so prevalent in ALL other federal programs?"

A partial answer to this problem is to exempt certain basic life requirements from the sales tax such as food or just certain basic food products. There could be other exempt catagories that would benefit the lower-income family or person, as well.